1. Without prejudice to the prerogatives of the Member States' institutions exercising the supervision of the national export credit programs, each Member State shall make available to the Commission an Annual Activity Report in order to step up transparency at Union level. Member States shall report, in accordance with their national legislative framework, on assets and liabilities, claims paid and recoveries, new commitments, exposures and premium charges. Where contingent liabilities might arise from officially supported export credit activities, those activities shall be reported as part of the Annual Activity Report.

2. In the Annual Activity Report, Member States shall describe how environmental risks, which can carry other relevant risks, are taken into account in the officially supported export credit activities of their ECAs.

3. The Commission shall produce an annual review for the European Parliament based on this information, including an evaluation regarding the compliance of ECAs with Union objectives and obligations.

4. The Commission, according to its competencies shall provide to the European Parliament an annual report on negotiations undertaken, where the Commission has negotiating authorisation in the various forums of international cooperation, to establish global standards in the field of officially supported export credits.

The first reporting period, under the scope of this Regulation, covers the year 2011.

(a) The main purpose of the Arrangement on Officially Supported Export Credits, referred to throughout this document as the Arrangement, is to provide a framework for the orderly use of officially supported export credits.

(b) The Arrangement seeks to foster a level playing field for official support, as defined in Article 5(a), in order to encourage competition among exporters based on quality and price of goods and services exported rather than on the most favourable officially supported financial terms and conditions.

(a) The Participants undertake to share information with non-Participants on notifications related to official support as set out in Article 5(a).

(b) A Participant shall, on the basis of reciprocity, reply to a request from a non-Participant in a competitive situation on the financial terms and conditions offered for its official support, as it would reply to a request from a Participant.

(a) Official support may be provided in different forms:

(b) The Arrangement shall apply to tied aid; the procedures set out in Chapter IV shall also apply to trade-related untied aid.

(c) The Arrangement does not apply to exports of Military Equipment and Agricultural Commodities.

(d) Official support shall not be provided if there is clear evidence that the contract has been structured with a purchaser in a country which is not the final destination of the goods, primarily with the aim of obtaining more favourable repayment terms.

(a) The following Sector Understandings are part of the Arrangement:

(b) A Participant to a Sector Understanding may apply its provisions for official support for export of goods and/or services covered by that Sector Understanding. Where a Sector Understanding does not include a corresponding provision to that of the Arrangement, a Participant to the Sector Understanding shall apply the provision of the Arrangement.

(a) The Participants may apply the terms and conditions set out in Annex VI to the export of goods and/or services for transactions that meet the criteria set out in Appendix 1 of Annex VI.

(b) Paragraph (a) above applies to the export of goods and services covered by the Sector Understanding on Export Credits for Nuclear Power Plants, the Sector Understanding on Export Credits for Renewable Energy, Climate Change Mitigation and Adaptation, and Water Projects, and the Sector Understanding on Export Credits for Railway Infrastructure.

(c) Paragraph (a) above does not apply to the export of goods and services covered by the Sector Understanding on Export Credits for Civil Aircraft or the Sector Understanding on Export Credits for Ships.

(a) The Participants shall require purchasers of goods and services which are the subject of official support to make down payments of a minimum of 15 % of the export contract value at or before the starting point of credit as defined in Annex XIV. For the assessment of down payments, the export contract value may be reduced proportionally if the transaction includes goods and services from a third country which are not officially supported. Financing/insurance of 100 % of the premium is permissible. Premium may or may not be included in the export contract value. Retention payments made after the starting point of credit are not regarded as down payment in this context.

(b) Official support for such down payments shall only take the form of insurance or guarantee against the usual pre-credit risks.

(c) Except as provided for in paragraphs (b) and (d), the Participants shall not provide official support in excess of 85 % of the export contract value, including third country supply but excluding local costs.

(d) The Participants may provide official support for local costs, provided that:

(a) Category I countries are High Income ( 6 ) OECD countries. All other countries are in Category II.

(b) The following operational criteria and procedures apply when classifying countries:

(c) A country will change category only after its World Bank category has remained unchanged for two consecutive years.

(a) For Category I countries, the maximum repayment term is five years, with the possibility of agreeing up to eight-and-a-half years when the procedures for prior notification set out in Article 48 are followed.

(b) For Category II countries, the maximum repayment term is ten years.

(c) In the event of a contract involving more than one country of destination the Participants should seek to establish a Common Line in accordance with the procedures in Articles 58 to 63 to reach agreement on appropriate terms.

(a) For non-nuclear power plants, the maximum repayment term shall be 12 years. If a Participant intends to support a repayment term longer than that provided for in Article 12, the Participant shall give prior notification in accordance with the procedure in Article 48.

(b) Non-nuclear power plants are complete power stations, or parts thereof, not fuelled by nuclear power; they include all components, equipment, materials and services (including the training of personnel) directly required for the construction and commissioning of such non-nuclear power stations. This does not include items for which the buyer is usually responsible, in particular costs associated with land development, roads, construction villages, power lines, and switchyard and water supply located outside the power plant site boundary, as well as costs arising in the buyer's country from official approval procedures (e.g. site permits, construction permit, fuel loading permits), except:

(a) The principal sum of an export credit shall be repaid in equal instalments.

(b) Principal shall be repaid and interest shall be paid no less frequently than every six months and the first instalment of principal and interest shall be made no later than six months after the starting point of credit.

(c) For export credits provided in support of lease transactions, equal repayments of principal and interest combined may be applied in lieu of equal repayments of principal as set out in paragraph (a).

(d) On an exceptional and duly justified basis, export credits may be provided on terms other than those set out in paragraphs (a) through (c) above. The provision of such support shall be explained by an imbalance in the timing of the funds available to the obligor and the debt service profile available under an equal, semi-annual repayment schedule, and shall comply with the following criteria:

(e) Interest due after the starting point of credit shall not be capitalised.

(a) Interest excludes:

(b) Where official support is provided by means of direct credits/financing or refinancing, the premium either may be added to the face value of the interest rate or may be a separate charge; both components are to be specified separately to the Participants.

(a) The Participants providing official financing support for fixed rate loans shall apply the relevant CIRRs as minimum interest rates. CIRRs are interest rates established according to the following principles:

(b) The provision of official financing support shall not offset or compensate, in part or in full, for the appropriate credit risk premium to be charged for the risk of non-repayment pursuant to the provisions of Article 23.

(a) Each Participant wishing to establish a CIRR shall initially select one of the following two base rate systems for its national currency:

Exceptions to the base rate system shall be agreed by the Participants.

(b) CIRRs shall be set at a fixed margin of 100 basis points above each Participant's base rate unless Participants have agreed otherwise.

(c) Other Participants shall use the CIRR set for a particular currency should they decide to finance in that currency.

(d) A Participant may change its base-rate system after giving six months' advance notice and with the counsel of the Participants.

(e) A Participant or a non-Participant may request that a CIRR be established for the currency of a non-Participant. In consultation with the interested non-Participant, a Participant or the Secretariat on behalf of that non-Participant may make a proposal for the construction of the CIRR in that currency using Common Line procedures in accordance with Articles 58 to 63.

(a) Where official financing support is provided for floating rate loans, banks and other financing institutions shall not be allowed to offer the option of the lower of either the CIRR (at time of the original contract) or the short-term market rate throughout the life of the loan.

(b) In the event of a voluntary, early repayment of a loan of or any portion thereof, the borrower shall compensate the government institution providing official financing support for all costs and losses incurred as a result of such early repayment, including the cost to the government institution of replacing the part of the fixed rate cash inflow interrupted by the early repayment.

(a) The applicable MPR is determined according to the following factors:

(b) MPRs are expressed in percentages of the principal value of the credit as if premium were collected in full at the date of the first drawdown of the credit. An explanation of how to calculate the MPRs, including the mathematical formula, is provided in Annex VIII.

(c) There are no MPRs for transactions involving obligors in Category 0 countries, High Income OECD Countries and High Income Euro Area Countries ( 7 ). The premium rates charged by Participants for transactions in such countries shall be determined on a case-by-case basis. In order to ensure that the premium rates charged for transactions involving obligors in such countries do not undercut private market pricing, the Participants shall adhere to the following procedure:

(d) The ‘highest risk’ countries in Category 7 shall, in principle, be subject to premium rates in excess of the MPRs established for that Category; these premium rates shall be determined by the Participant providing official support.

(e) In calculating the MPR for a transaction, the applicable country risk classification shall be the classification of the obligor's country and the applicable buyer risk classification shall be the classification of the obligor ( 9 ), unless:

(f) The criteria and conditions relating to the application of a third party guarantee according to the situations described in the first and second tirets of paragraph (e) above are set out in Annex X.

(g) The HOR convention used in the calculation of an MPR is one-half of the disbursement period plus the entire repayment period and assumes a regular export credit repayment profile, i.e. repayment in equal semi-annual instalments of principal plus accrued interest beginning six months after the starting point of credit. For export credits with non-standard repayment profiles, the equivalent repayment period (expressed in terms of equal, semi-annual instalments) is calculated using the following formula: equivalent repayment period = (average weighted life of the repayment period – 0,25)/0,5.

(h) The Participant choosing to apply an MPR associated with a third party guarantor located in a country other than that of the obligor shall give prior notification according to Article 47. The Participant choosing to apply a MPR associated with a Multilateral or Regional Institution acting as a guarantor shall give prior notification in accordance with Article 48.

(a) The five elements of country credit risk are:

(b) Countries are classified into one of eight Country Risk Categories (0-7). MPRs have been established for Categories 1 through 7, but not for Category 0, as the level of country risk is considered to be negligible for countries in this Category. The credit risk associated with transactions in Category 0 countries is predominantly related to the risk of the obligor/guarantor.

(c) The classification of countries ( 11 ) is achieved through the Country Risk Classification Methodology, which is comprised of:

(d) Country Risk Classifications shall be monitored on an on-going basis and reviewed at least annually and changes resulting from the Country Risk Classification Methodology shall be immediately communicated by the Secretariat. When a country is re-classified in a lower or higher Country Risk Category, the Participants shall, no later than five working days after the re-classification has been communicated by the Secretariat, charge premium rates at or above the MPRs associated with the new Country Risk Category.

(e) The country risk classifications shall be made public by the Secretariat.

(a) For all countries classified through the Country Risk Classification Methodology according to Article 25(d), the risk of the sovereign shall be assessed in order to identify, on an exceptional basis, those sovereigns:

(b) The identification of sovereigns meeting the criteria listed in paragraph (a) above shall be undertaken according to the Sovereign Risk Assessment Methodology that has been developed and agreed by the Participants.

(c) The list of sovereigns identified as meeting the criteria listed in paragraph (a) above shall be monitored on an on-going basis and reviewed at least annually and changes resulting from the Sovereign Risk Assessment Methodology shall be immediately communicated by the Secretariat.

(d) The list of sovereigns identified under paragraph (b) above shall be made public by the Secretariat.

(a) Buyer-risk classifications shall be based on the senior unsecured credit rating of the obligor/guarantor as determined by the Participant.

(b) Notwithstanding paragraph (a) above, transactions supported according to the terms and conditions of Annex VI and transactions having a credit value of SDR 5 million or less may be classified on a transaction basis, i.e. after the application of any buyer risk credit enhancements; however, such transactions, regardless of how they are classified, are not eligible for any discounts for the application of buyer risk credit enhancements.

(c) Sovereign obligors and guarantors are classified in buyer risk category SOV/CC0.

(d) On an exceptional basis, non-sovereign obligors and guarantors may be classified in the ‘Better than Sovereign’ (SOV+) buyer risk category ( 13 ) if:

(e) The Participants shall give prior notification according to Article 48 for transactions:

(f) In the event of competition for a specific transaction, whereby the obligor/guarantor has been classified by competing Participants in different buyer risk categories, the competing Participants shall seek to arrive at a common buyer risk classification. If agreement on a common classification is not reached, the Participant(s) having classified the obligor/guarantor in a higher buyer risk classification are not prohibited from applying the lower buyer risk classification.

(a) The quality of an export credit product is a function of whether the product is insurance, guarantee or direct credit/financing, and for insurance products whether cover of interest during the claims waiting period (i.e. the period between the due date of payment by the obligor and the date that the insurer is liable to reimburse the exporter/financial institution) is provided without a surcharge.

(b) All existing export credit products offered by the Participants shall be classified into one of the three product categories which are:

(a) The Participants may apply the following country risk mitigation techniques, the specific application of which is set out in Annex XII:

(b) The Participant applying an MPR reflecting the use of country risk mitigation shall give prior notification according to Article 47.

(a) The Participants may apply the following buyer risk credit enhancements (BRCE) which allow for the application of a Credit Enhancement Factor (CEF) greater than 0:

(b) Definitions of the BRCE and maximum CEF values are set out in Annex XII.

(c) BRCEs may be used alone or in combination with the following restrictions:

(d) The Participants shall give prior notification according to Article 48 for transactions with a non-sovereign obligor/guarantor having a credit of greater than SDR 5 million where BRCEs result in the application of a CEF of greater than 0.

(a) To assess the adequacy of MPRs and to allow, if necessary, for adjustments, either upwards or downwards, Premium Feedback Tools (PFTs), shall be used in parallel to monitor and adjust the MPRs on a regular basis.

(b) The PFTs shall assess the adequacy of the MPRs in terms of both the actual experience of institutions providing official export credits as well as private market information on the pricing of credit risk.

(c) A comprehensive review of all aspects of the premium rules of the Arrangement shall take place no later than 31 December 2015.

(a) The Participants have agreed to have complementary policies for export credits and tied aid. Export credit policies should be based on open competition and the free play of market forces. Tied aid policies should provide needed external resources to countries, sectors or projects with little or no access to market financing. Tied aid policies should ensure best value for money, minimise trade distortion, and contribute to developmentally effective use of these resources.

(b) The tied aid provisions of the Arrangement do not apply to the aid programmes of multilateral or regional institutions.

(c) These principles do not prejudge the views of the Development Assistance Committee (DAC) on the quality of tied and untied aid.

(d) A Participant may request additional information relevant to the tying status of any form of aid. If there is uncertainty as to whether a certain financing practice falls within the scope of the definition of tied aid set out in Annex XIV, the donor country shall furnish evidence in support of any claim to the effect that the aid is in fact ‘untied’ in accordance with the definition in Annex XIV.

(a) Official Development Assistance (ODA) loans as defined in the ‘DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance (1987)’;

(b) ODA grants as defined in the ‘DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance (1987)’; and

(c) Other Official Flows (OOF), which includes grants and loans but excludes officially supported export credits that are in conformity with the Arrangement; or

(d) Any association, e.g. mixture, in law or in fact, within the control of the donor, the lender or the borrower involving two or more of the preceding, and/or the following financing components:

(a) Associated financing may take various forms including mixed credits, mixed financing, joint financing, parallel financing or single integrated transactions. The main characteristics are that they all feature:

(b) Association or linkage ‘in fact’ is determined by such factors as:

(c) The following practices shall not prevent the determination of an association or linkage ‘in fact’:

(a) There shall be no tied aid to countries whose per capita GNI, according to the World Bank data, is above the upper limit for lower middle income countries. The World Bank recalculates this threshold on an annual basis ( 17 ). A country will be reclassified only after its World Bank category has been unchanged for two consecutive years.

(b) The following operational criteria and procedures apply when classifying countries:

(a) Tied aid shall not be extended to public or private projects that normally should be commercially viable if financed on market or Arrangement terms.

(b) The key tests for such aid eligibility are:

(c) The key tests under paragraph (b) above are intended to describe how a project should be evaluated to determine whether it should be financed with such aid or with export credits on market or Arrangement terms. Through the consultation process described in Articles 51 to 53, a body of experience is expected to develop over time that will more precisely define, for both export credit and aid agencies, ex ante guidance as to the line between the two categories of projects.

(a) Technical assistance: tied aid where the official development aid component consists solely of technical co-operation that is less than either 3 % of the total value of the transaction or SDR 1 million, whichever is lower; and

(b) Small projects: capital projects of less than SDR 1 million that are funded entirely by development assistance grants.

(a) The provisions of Articles 36 and 37 do not apply to tied aid where the concessionality level is 80 % or more except for tied aid that forms part of an associated financing package, described in Article 35.

(b) The provisions of Article 37 do not apply to tied aid with a value of less than SDR 2 million except for tied aid that forms part of an associated financing package, described in Article 35.

(c) Tied aid for LDCs as defined by the United Nations is not subject to the provisions of Articles 36 and 37.

(d) The Participants shall give favourable consideration to an acceleration of tied aid procedures in line with the specific circumstances:

(e) Notwithstanding Articles 36 and 37, a Participant may, exceptionally, provide support by one of the following means:

(a) The discount rate used to calculate the concessionality level of a loan in a given currency, i.e. the Differentiated Discount Rate (DDR), is subject to annual change on 15 January and is calculated as follows:

(b) The base date for the calculation of the concessionality level is the starting point of credit as set out in Annex XIV.

(c) For the purpose of calculating the overall concessionality level of an associated financing package, the concessionality levels of the following credits, funds and payments are considered to be zero:

Payments on or before the starting point of credit that are not considered down payment shall be included in the calculation of the concessionality level.

(d) The discount rate in matching: in matching aid, identical matching means matching with an identical concessionality level that is recalculated with the discount rate in force at the time of matching.

(e) Local costs and third country procurement shall be included in the calculation of concessionality level only if they are financed by the donor country.

(f) The overall concessionality level of a package is determined by multiplying the nominal value of each component of the package by the respective concessionality level of each component, adding the results, and dividing this total by the aggregate nominal value of the components.

(g) The discount rate for a given aid loan is the rate in effect at the time of notification. However, in cases of prompt notification, the discount rate is the one in effect at the time when the terms and conditions of the aid loan were fixed. A change in the discount rate during the life of a loan does not change its concessionality level.

(h) If a change of currency is made before the contract is concluded, the notification shall be revised. The discount rate used to calculate the concessionality level will be the one applicable at the date of revision. A revision is not necessary if the alternative currency and all the necessary information for calculation of the concessionality level are indicated in the original notification.

(i) Notwithstanding paragraph (g) above, the discount rate used to calculate the concessionality level of individual transactions initiated under an aid credit line shall be the rate that was originally notified for the credit line.

(a) The Participants shall not fix terms and conditions for tied aid, whether this relates to the financing of individual transactions or to an aid protocol, an aid credit line or to a similar agreement, for more than two years. In the case of an aid protocol, an aid credit line or similar agreement, the validity period shall commence at the date of its signature, to be notified in accordance with Article 50; the extension of a credit line shall be notified as if it were a new transaction with a note explaining that it is an extension and that it is renewed at terms allowed at the time of the notification of the extension. In the case of individual transactions, including those notified under an aid protocol, an aid credit line or similar agreement, the validity period shall commence at the date of notification of the commitment in accordance with Article 49 or 50, as appropriate.

(b) When a country has become ineligible for 17-year World Bank Loans for the first time, the validity period of existing and new tied aid protocols and credit lines notified shall be restricted to one year after the date of the potential reclassification in accordance with procedures in Article 36(b).

(c) Renewal of such protocols and credit lines is possible only on terms which are in accordance with the provisions of Articles 36 and 37 of the Arrangement following:

(a) As soon as a Participant commits the official support which it has notified in accordance with the procedures in Articles 47 to 50, it shall inform all other Participants accordingly by including the notification reference number on the relevant reporting form.

(b) In an exchange of information in accordance with Articles 55 to 57, a Participant shall inform the other Participants of the credit terms and conditions that it envisages supporting for a particular transaction and may request similar information from the other Participants.

(a) Before matching financial terms and conditions assumed to be offered by a Participant or a non-Participant pursuant to Articles 18 and 42, a Participant shall make every reasonable effort, including as appropriate by use of the face-to-face consultations described in Article 57, to verify that these terms and conditions are officially supported and shall comply with the following:

(b) A Participant intending to offer identical financial terms and conditions to those notified according to Articles 47 and 48 may do so once the waiting period stipulated therein has expired. This Participant shall give notification of its intention as early as possible.

(a) A Participant that has reasonable grounds to believe that financial terms and conditions offered by another Participant (the initiating Participant) are more generous than those provided for in the Arrangement shall inform the Secretariat; the Secretariat shall immediately make available such information.

(b) The initiating Participant shall clarify the financial terms and conditions of its offer within two working days following the issue of the information from the Secretariat.

(c) Following clarification by the initiating Participant, any Participant may request that a special consultation meeting of the Participants be organised by the Secretariat within five working days to discuss the issue.

(d) Pending the outcome of the special consultation meeting of the Participants, financial terms and conditions benefiting from official support shall not become effective.

(a) A Participant shall notify all other Participants at least ten calendar days before issuing any commitment in accordance with Annex VII if:

(b) If any other Participant requests a discussion during this period, the initiating Participant shall wait an additional ten calendar days.

(c) A Participant shall inform all other Participants of its final decision following a discussion to facilitate the review of the body of experience in accordance with Article 69. The Participants shall maintain records of their experience with regard to premium rates notified in accordance with paragraph (a) above.

(a) A Participant shall, in accordance with Annex VII, notify all other Participants at least ten calendar days before issuing any commitment if it intends to:

(b) If the initiating Participant moderates or withdraws its intention to provide support for such transaction, it shall immediately inform all other Participants.

(a) A Participant shall give prior notification in accordance with Annex VII if it intends to provide official support for:

(b) Prior notification shall be made at the latest 30 working days before the bid closing or commitment date, whichever is the earlier.

(c) If the initiating Participant moderates or withdraws its intention to support the notified terms and conditions, it shall immediately inform all other Participants accordingly.

(d) The provision of this Article shall apply to tied aid that forms part of an associated financing package, as described in Article 35.

(a) A Participant shall promptly notify all other Participants, i.e. within two working days of the commitment, in accordance with Annex VII, if it provides official support for tied aid with a value of either:

(b) A Participant shall also promptly notify all other Participants when an aid protocol, credit line or similar agreement is signed.

(c) Prior notification need not be given if a Participant intends to match financial terms and conditions that were subject to a prompt notification.

(a) A Participant seeking clarification about possible trade motivation for tied aid may request that a full Aid Quality Assessment (detailed in Annex XIII) be supplied.

(b) Furthermore, a Participant may request consultations with other Participants, in accordance with Article 52. These include face-to-face consultations as outlined in Article 57 in order to discuss:

(a) During consultations, a Participant may request, among other items, the following information:

(b) The consultation shall be completed and the findings on both questions in Article 51 notified by the Secretariat to all Participants at least ten working days before the bid closing date or commitment date, whichever comes first. If there is disagreement among the consulting parties, the Secretariat shall invite other Participants to express their views within five working days. It shall report these views to the notifying Participant, which should reconsider going forward if there appears to be no substantial support for an aid offer.

(a) A donor which wishes to proceed with a project despite the lack of substantial support shall provide prior notification of its intentions to other Participants, no later than 60 calendar days after the completion of the Consultation, i.e. acceptance of the Chairman's conclusion. The donor shall also write a letter to the Secretary-General of the OECD outlining the results of the consultations and explaining the overriding non-trade related national interest that forces this action. The Participants expect that such an occurrence will be unusual and infrequent.

(b) The donor shall immediately notify the Participants that it has sent a letter to the Secretary-General of the OECD, a copy of which shall be included with the notification. Neither the donor nor any other Participant shall make a tied aid commitment until ten working days after this notification to Participants has been issued. For projects for which competing commercial offers were identified during the consultation process, the aforementioned ten-working-day period shall be extended to 15 days.

(c) The Secretariat shall monitor the progress and results of consultations.

(a) A Participant may ask another Participant about the attitude it takes with respect to a third country, an institution in a third country or a particular method of doing business.

(b) A Participant which has received an application for official support may address an enquiry to another Participant, giving the most favourable credit terms and conditions that the enquiring Participant would be willing to support.

(c) If an enquiry is made to more than one Participant, it shall contain a list of addressees.

(d) A copy of all enquiries shall be sent to the Secretariat.

(a) The Participant to which an enquiry is addressed shall respond within seven calendar days and provide as much information as possible. The reply shall include the best indication that the Participant can give of the decision it is likely to take. If necessary, the full reply shall follow as soon as possible. Copies shall be sent to the other addressees of the enquiry and to the Secretariat.

(b) If an answer to an enquiry subsequently becomes invalid for any reason, because for example:

a reply shall be made without delay and copied to all other addressees of the enquiry and to the Secretariat.

(a) A Participant shall agree within ten working days to requests for face-to-face consultations.

(b) A request for face-to-face consultations shall be made available to Participants and non-Participants. The consultations shall take place as soon as possible after the expiry of the ten-working-day period.

(c) The Chairman of the Participants shall co-ordinate with the Secretariat on any necessary follow-up action, e.g. a Common Line. The Secretariat shall promptly make available the outcome of the consultation.

(a) Common Line proposals are addressed only to the Secretariat. A proposal for a Common Line shall be sent to all Participants and, where tied aid is involved, all DAC contact points by the Secretariat. The identity of the initiator is not revealed on the Common Line Register on the Bulletin Board of the OLIS. However, the Secretariat may orally reveal the identity of the initiator to a Participant or DAC member on demand. The Secretariat shall keep a record of such requests.

(b) The Common Line proposal shall be dated and shall be in the following format:

(c) A Common Line proposal put forward in accordance with Article 36(b)(4) shall be addressed to the Secretariat and copied to other Participants. The Participant making the Common Line proposal shall provide a full explanation of the reasons why it considers that the classification of a country should differ from the procedure set out in Article 36(b).

(d) The Secretariat shall make publicly available the agreed Common Lines.

(a) Responses shall be made within 20 calendar days, although the Participants are encouraged to respond to a Common Line proposal as quickly as possible.

(b) A response may be a request for additional information, acceptance, and rejection, a proposal for modification of the Common Line or an alternative Common Line proposal.

(c) A Participant which advises that it has no position because it has not been approached by an exporter, or by the authorities in the recipient country in case of aid for the project, shall be deemed to have accepted the Common Line proposal.

(a) After a period of 20 calendar days, the Secretariat shall inform all Participants of the status of the Common Line proposal. If not all Participants have accepted the Common Line, but no Participant has rejected it, the proposal shall be left open for a further period of eight calendar days.

(b) After this further period, a Participant which has not explicitly rejected the Common Line proposal shall be deemed to have accepted the Common Line. Nevertheless, a Participant, including the initiating Participant, may make its acceptance of the Common Line conditional on the explicit acceptance by one or more Participants.

(c) If a Participant does not accept one or more elements of a Common Line it implicitly accepts all other elements of the Common Line. It is understood that such a partial acceptance may lead other Participants to change their attitude towards a proposed Common Line. All Participants are free to offer or match terms and conditions not covered by a Common Line.

(d) A Common Line which has not been accepted may be reconsidered using the procedures in Articles 58 and 59. In these circumstances, the Participants are not bound by their original decision.

(a) A Common Line, once agreed, shall be valid for a period of two years from its effective date, unless the Secretariat is informed that it is no longer of interest, and that this is accepted by all Participants. A Common Line shall remain valid for a further two-year period if a Participant seeks an extension within 14 calendar days of the original date of expiry. Subsequent extensions may be agreed through the same procedure. A Common Line agreed in accordance with Article 36(b)(4) shall be valid until World Bank data for the following year is available.

(b) The Secretariat shall monitor the status of Common Lines and shall keep the Participants informed accordingly, through the maintenance of the listing ‘The Status of Valid Common Lines’ on OLIS. Accordingly, the Secretariat, inter alia, shall:

(a) CIRRs for currencies that are determined according to the provisions of Article 20 shall be sent by means of instant communication at least monthly to the Secretariat for circulation to all Participants.

(b) Such notification shall reach the Secretariat no later than five days after the end of each month covered by this information. The Secretariat shall then inform immediately all Participants of the applicable rates and make them publicly available.

(a) The Participants shall review regularly the functioning of the Arrangement. In the review, the Participants shall examine, inter alia, notification procedures, implementation and operation of the DDR system, rules and procedures on tied aid, questions of matching, prior commitments and possibilities of wider participation in the Arrangement.

(b) This review shall be based on information of the Participants' experience and on their suggestions for improving the operation and efficacy of the Arrangement. The Participants shall take into account the objectives of the Arrangement and the prevailing economic and monetary situation. The information and suggestions that Participants wish to put forward for this review shall reach the Secretariat no later than 45 calendar days before the date of review.

(a) The Participants shall periodically review the system for setting CIRRs in order to ensure that the notified rates reflect current market conditions and meet the aims underlying the establishment of the rates in operation. Such reviews shall also cover the margin to be added when these rates are applied.

(b) A Participant may submit to the Chairman of the Participants a substantiated request for an extraordinary review in case this Participant considers that the CIRR for one or more than one currency no longer reflect current market conditions.

(a) The Country Risk Classification and Sovereign Risk Assessment Methodologies to review their validity in the light of experience;

(b) The level of the MPRs to ensure that they remain an accurate measure of credit risk, taking into account both the actual experience of institutions providing official export credits as well as private market information on the pricing of credit risk;

(c) The differentiations in the MPRs which take account of the differing quality of export credit products and percentage of cover provided; and

(d) The body of experience related to the use of country risk mitigation and buyer risk credit enhancements and the continued validity and appropriateness of their specific impact on the MPRs.

(a) Any new sea-going vessel of 100 gt and above used for the transportation of goods or persons, or for the performance of a specialised service (for example, fishing vessels, fish factory ships, ice breakers and as dredgers, that present in a permanent way by their means of propulsion and direction (steering) all the characteristics of self-navigability in the high sea), tugs of 365 kw and over and to unfinished shells of ships that are afloat and mobile. The Sector Understanding does not cover military vessels. Floating docks and mobile offshore units are not covered by the Sector Understanding, but should problems arise in connection with export credits for such structures, the Participants to the Sector Understanding (hereinafter the ‘Participants’), after consideration of substantiated requests by any Participant, may decide that they shall be covered.

(b) Any conversion of a ship. Ship conversion means any conversion of sea-going vessels of more than 1 000  gt on condition that conversion operations entail radical alterations to the cargo plan, the hull or the propulsion system.

(c)

(a) The principal sum of an export credit shall be repaid in equal instalments at regular intervals of normally six months and a maximum of 12 months.

(b) Interest shall be paid no less frequently than every six months and the first payment of interest shall be made no later than six months after the starting point of credit.

(c) For export credits provided in support of lease transactions, equal repayments of principal and interest combined may be applied in lieu of equal repayments of principal as set out in paragraph (a).

(d) Interest due after the starting point of credit shall not be capitalised.

(e) A Participant to this Sector Understanding intending to support a payment of interest on different terms than those set out in paragraph (b) shall give prior notification at least ten calendar days before issuing any commitment, in accordance with Annex VII of the Arrangement.

(a) The Sector Understanding shall be reviewed annually or upon request by any Participant within the context of the OECD Working Party on Shipbuilding, and a report made to the Participants to the Arrangement.

(b) To facilitate coherence and consistency between the Arrangement and this Sector Understanding and taking into account the nature of the shipbuilding industry, the Participants to this Sector Understanding and to the Arrangement will consult and co-ordinate as appropriate.

(c) Upon a decision by the Participants to the Arrangement to change the Arrangement, the Participants to this Sector Understanding (the Participants) will examine such a decision and consider its relevance to this Sector Understanding. Pending such consideration the amendments to the Arrangement will not apply to this Sector Understanding. In case the Participants can accept the amendments to the Arrangement they shall report this in writing to the Participants to the Arrangement. In case the Participants cannot accept the amendments to the Arrangement as far as their application to shipbuilding is concerned they shall inform the Participants to the Arrangement of their objections and enter into consultations with them with a view to seeking a resolution of the issues. In case no agreement can be reached between the two groups, the views of the Participants as regards the application of the amendments to shipbuilding shall prevail.

(a) To develop an illustrative list of types of ships which are generally considered non-commercially viable, taking into account the disciplines on tied aid set out in the Arrangement.

(b) To review the provisions of the Arrangement in relation to minimum premium benchmarks with a view to incorporating them into this Sector Understanding.

(c) To discuss, subject to the developments in relevant international negotiations, the inclusion of other disciplines on minimum interest rates including a special CIRR and floating rates.

(d) To review the applicability to this Sector Understanding of provisions of the Arrangement in relation to Project Finance.

(e) To discuss whether:

may be used in relation to the repayment profile contained in Article 5 of this Sector Understanding.

(a) This Sector Understanding sets out the provisions which apply to officially supported export credits relating to contracts for:

(b) This Sector Understanding does not apply to:

(a) The maximum repayment term for goods and services included in the provisions of Articles 1(a)(1) and (2) of this Sector Understanding is 18 years.

(b) The maximum repayment term for the initial fuel load is four years from delivery. The maximum repayment term for subsequent reloads of nuclear fuel is two years from delivery.

(c) The maximum repayment term for spent fuel disposal is two years.

(d) The maximum repayment term for enrichment and spent fuel management is five years.

(a) The Participants shall apply a profile of repayment of principal and payment of interest as specified in sub-paragraph (1) or (2) below:

(b) Principal shall be repaid and interest shall be paid no less frequently than every six months and the first instalment of principal and interest shall be made no later than six months after the starting point of credit.

(c) On an exceptional and duly justified basis, official support for goods and services mentioned in Articles(1)(a)(1) and (2) of this Understanding may be provided on terms other than those set out in paragraphs (a) and (b) above. The provision of such support shall be explained by an imbalance in the timing of the funds available to the obligor and the debt service profile available under an equal, semi-annual repayment schedule, and shall comply with the following criteria:

(d) Interest due after the starting point of credit shall not be capitalised.

(a) A Participant shall give prior notification in accordance with Article 48 of the Arrangement at least ten calendar days before issuing any commitment if it intends to provide support in accordance with the provisions of this Sector Understanding.

(b) If the notifying Participant intends to provide support with a repayment term in excess of 15 years and/or in accordance with Article 3(c) of this Sector Understanding, it shall wait an additional ten calendar days if any other Participant requests a discussion during the initial ten calendar days.

(c) A Participant shall inform all other Participants of its final decision following a discussion, to facilitate the review of the body of experience.

(a) A minimum floating interest rate regime.

(b) The maximum amount of official support for local costs.

(a) The purpose of this Sector Understanding is to provide a framework for the predictable, consistent and transparent use of officially supported export credits for the sale or lease of aircraft and other goods and services specified in Article 4(a) below. This Sector Understanding seeks to foster a level playing field for such export credits, in order to encourage competition among exporters based on quality and price of goods and services exported rather than on the most favourable officially supported financial terms and conditions.

(b) This Sector Understanding sets out the most favourable terms and conditions on which officially supported export credits may be provided.

(c) To this aim, this Sector Understanding seeks to establish a balanced equilibrium that, on all markets:

(d) The Participants to this Sector Understanding (the Participants) acknowledge that the provisions included in this Sector Understanding have been developed for the sole purpose of this Sector Understanding and such provisions do not prejudice the other parts of the Arrangement on Officially Supported Export Credits (the Arrangement) and their evolution.

(a) This Sector Understanding shall apply to all official support provided by or on behalf of a government, and which has a repayment term of two years or more, for the export of:

(b) Official support may be provided in different forms:

(c) This Sector Understanding shall not apply to official support for:

(a) For the purpose of this Sector Understanding, a new aircraft is:

(b) Notwithstanding the provisions of paragraph (a) above, a Participant may support terms appropriate to new aircraft for transactions where, with the prior knowledge of that Participant, interim financing arrangements had been put in place because the provision of official support had been delayed; such delay shall not be longer than 18 months. In such cases, the repayment term and the final repayment date shall be the same as if the sale or lease of the aircraft would have been officially supported from the date the aircraft was originally delivered.

(a) For transactions with buyers/borrowers classified in Risk Category 1 (as per Table 1 of Appendix II), the Participants shall:

(b) For transactions with buyers/borrowers classified in Risk Categories 2 to 8 (as per Table 1 of Appendix II), the Participants shall:

(c) A Participant which applies Article 8(b) above shall reduce the maximum amount of official support by the amount of principal of the instalments deemed due from the starting point of the credit so as to ensure that, at the time of disbursement, the amount outstanding is the same as if such an officially supported export credit was provided at the time of delivery. In such circumstances, prior to delivery the Participant shall have received an application for official support.

(a) The Participants providing official support shall charge, for the credit amount officially supported, no less than the minimum premium rate set out in accordance with Appendix II.

(b) The Participants shall use, whenever necessary, the agreed premium rate conversion model to convert between per annum spreads calculated on the outstanding amount of the official support and single up-front premium rates calculated on the original amount of the official support.

(a) The maximum repayment term shall be 12 years for all new aircraft.

(b) On an exceptional basis, and with a prior notification, a maximum repayment term of up to 15 years shall be allowed. In this case, a surcharge of 35 % to the minimum premium rates calculated in accordance with Appendix II shall apply.

(c) There shall be no extension of the repayment term by way of sharing of rights in the security on a pari passu basis with commercial lenders for the officially supported export credit.

(a) The Participants shall apply a profile of repayment of principal and payment of interest as specified in sub-paragraph (1) or (2) below.

(b) Notwithstanding paragraph (a) above, and subject to a prior notification, the repayment of principal may be structured to include a final payment of all outstanding amounts on a specified date. In such case, repayments of principal prior to the final payment will be structured as set out in paragraph (a) above, based on an amortization period not greater than the maximum repayment term allowed for the goods and services being supported.

(c) Notwithstanding paragraph (a) above, repayment of principal may be structured on terms less favourable to the obligor.

(d) Interest due after the starting point of credit shall not be capitalised.

(a) The Participants providing official financing support shall apply either a minimum floating interest rate or a minimum fixed interest rate, in accordance with the provisions of Appendix III.

(b) For jet aircraft of a net price of at least USD 35 million, official financing support on CIRR basis shall only be provided in exceptional circumstances. A Participant intending to provide such support shall notify all other Participants at least 20 calendar days before final commitment, identifying the borrower.

(c) Interest rate excludes any payment by way of premium referred to in Article 11 above, and fees referred to in Article 16 below.

(a) Subject to the limits of the premium holding period, the Participants providing official support in the form of pure cover shall charge a premium holding fee on the un-drawn portion of the official support during the premium holding period, as follows:

(b) The Participants providing official support in the form of direct credit / financing shall charge the following fees:

(a) Subject to paragraph (b) below, the maximum repayment term for used aircraft shall be established in accordance with the age of the aircraft, as set out in the following table:

(b) The maximum repayment term for aircraft that have undergone conversion, provided the transaction meets all the requirements of Article 19 of Appendix II and provided further that official support, if any, provided in respect of such conversion was not provided in accordance with Article 21(a) below, shall be established in accordance with the period of time since the date of conversion and the age of the aircraft, as set out in the following table:

(a) When purchased, or ordered in connection with the engines to be installed on a new aircraft, the official support for spare engines may be provided on the same terms and conditions as for the aircraft.

(b) When purchased with new aircraft, the official support for spare parts may be provided on the same terms and conditions as for the aircraft up to a maximum 5 % of the net price of the new aircraft and installed engines; paragraph (d) below shall apply to official support for spare parts in excess of the 5 % limit.

(c) When spare engines are not purchased with a new aircraft, the maximum repayment term shall be eight years. For spare engines with a unit value of USD 10 million or more, provided the transaction meets all the requirements of Article 19 of Appendix II, the repayment term shall be 10 years.

(d) When other spare parts are not purchased with a new aircraft, the maximum repayment term shall be:

(a) If a transaction for conversion:

(b) If a transaction is for a major modification, or refurbishment, a Participant may offer official support with a repayment term of up to:

(a) Within one month after the date of a final commitment, a Participant shall submit the information required in Appendix IV to all other Participants, with a copy to the Secretariat.

(b) In order to establish the margin benchmark in accordance with Appendix III Article 8(b), information on pure cover margins, as outlined in Appendix III Articles 8(c) and (d), shall be submitted to the Secretariat no later than five days after the end of each month.

(a) A Participant may ask another Participant for information about the use of its officially supported export credits for the sale or lease of aircraft covered by this Sector Understanding.

(b) A Participant which has received an application for official support may address an enquiry to another Participant, giving the most favourable credit terms and conditions that the enquiring Participant would be willing to support.

(c) The Participant to which such an enquiry is addressed shall respond within seven calendar days and provide reciprocal information to the fullest extent possible. The reply shall include the best indication that the Participant can give of the decision it is likely to take. If necessary, the full reply shall follow as soon as possible.

(d) Copies of all enquiries and responses shall be sent to the Secretariat.

(a) In a competitive situation, a Participant may request face-to-face consultations with one or more Participants.

(b) Any Participant shall agree within ten working days to such requests.

(c) The consultations shall take place as soon as possible after the expiry of the ten working-day period.

(d) The Chairman of the Participants shall co-ordinate with the Secretariat on any necessary follow-up action. The Secretariat shall promptly make available to all Participants the outcome of the consultation.

(a) A Participant (the initiating Participant) that has reasonable grounds to believe that financial terms and conditions offered by another Participant (the responding Participant) are more generous than those provided for in this Sector Understanding shall inform the Secretariat; the Secretariat shall immediately make available such information to the responding Participant.

(b) The responding Participant shall clarify the financial terms and conditions of the official support being considered within five working days following the issue of the information from the Secretariat.

(c) Following clarification by the responding Participant, the initiating Participant may request that a special consultation with the responding Participant be organised by the Secretariat within five working days to discuss the issue.

(d) The responding Participant shall wait for the outcome of the consultation which shall be determined on the day of such consultation before proceeding any further with the transaction.

(a) Common Line proposals shall be addressed to the Secretariat only. The identity of the initiator is not revealed on the Common Line register on the OLIS. However, the Secretariat may orally reveal the identity of the initiator to a Participant on demand. The Secretariat shall keep a record of such requests.

(b) The Common Line proposal shall be dated and shall be in the following format:

(a) Responses shall be made within 20 calendar days, although the Participants are encouraged to respond to a Common Line proposal as quickly as possible.

(b) A response may be acceptance, rejection, a request for additional information, a proposal for modification of the Common Line or an alternative Common Line proposal.

(c) A Participant which remains silent or advises that it has no position shall be deemed to have accepted the Common Line proposal.

(a) After a period of 20 calendar days, the Secretariat shall inform all Participants of the status of the Common Line proposal. If not all Participants have accepted the Common Line, but no Participant has rejected it, the proposal shall be left open for a further period of eight calendar days.

(b) After this further period, a Participant which has not explicitly rejected the Common Line proposal shall be deemed to have accepted the Common Line. Nevertheless, a Participant, including the initiating Participant, may make its acceptance of the Common Line conditional on the explicit acceptance by one or more Participants.

(c) If a Participant does not accept one or more elements of a Common Line it implicitly accepts all other elements of the Common Line.

(a) If the initiating Participant and a Participant which has proposed a modification or alternative cannot agree on a Common Line within the additional eight calendar-day period mentioned in Article 30 above, this period can be extended by their mutual consent. The Secretariat shall inform all Participants of any such extension.

(b) A Common Line which has not been accepted may be reconsidered using the procedures in Articles 28 to 30 above. In these circumstances, the Participants are not bound by their original decision.

(a) Unless agreed otherwise, a Common Line, once agreed, shall be valid for a period of two years from its effective date, unless the Secretariat is informed that it is no longer of interest, and that such situation is accepted by all Participants.

(b) If a Participant seeks an extension within 14 calendar days of the original date of expiry and in the absence of disagreement, a Common Line shall remain valid for a further two-year period; subsequent extensions may be agreed through the same procedure.

(c) The Secretariat shall monitor the status of Common Lines and shall keep the Participants informed accordingly, through the maintenance of the listing ‘The Status of Valid Common Lines’ on OLIS. Accordingly, the Secretariat, inter alia, shall issue, on a quarterly basis, a list of Common Lines due to expire in the following quarter.

(d) Upon the request of a non-Participant which produces competing aircraft, the Secretariat shall make available valid Common Lines to that non-Participant.

(a) Taking into account a Participant's international obligations, a Participant may match financial terms and conditions of official support offered by a non-Participant.

(b) In the event of matching non-conforming terms and conditions offered by a non-Participant:

(c) If a matching Participant modifies or withdraws its intention to support the notified terms and conditions, it shall immediately inform all other Participants accordingly.

(a) The Secretariat shall monitor the implementation of this Sector Understanding and report to the Participants on an annual basis.

(b) Each transaction deemed eligible under Article 39(a) shall be reported in accordance with the provisions of Article 24(a) and Appendix IV.

(c) Each transaction deemed eligible under Article 39(b) shall be reported in accordance with the provisions of Article 24(a) and Appendix IV, in addition to which:

(a) The Participants shall undertake the review of this Sector Understanding as follows:

(b) The review set out in sub-paragraph (a)(1) above shall consider:

(c) In recognition of the importance of the review process, to ensure that the terms and conditions of this Sector Understanding continue to meet the needs of the Participants, each Participant reserves the right to withdraw from this Sector Understanding in accordance with Article 40 below.

(a) Examining Participants' practices in providing official support before the starting point of credit.

(b) The provisions applicable to indirect loans.

(c) An extension of maximum repayments terms under Article 19 for used aircraft that have undergone significant refurbishment prior to sale.

(d) An extension of maximum repayment terms under Article 21 for larger contract values.

(e) The provisions applicable to ‘refurbishing’ (Article 2(1) and ‘services’ (Article 22).

(f) The Cape Town eligibility process.

(g) The definition of ‘Interested Participant’.

(a) The Participants may provide official support on the terms and conditions set out in the Aircraft Sector Understanding in force as of 1 July 2007 (‘the 2007 ASU’) if the following conditions are fulfilled:

(b) The Participants may provide official support on terms and conditions applicable prior to the effective date of this Sector Understanding if the following conditions are fulfilled:

(c) The implementation of this Article shall be monitored in accordance with Articles 35(b) and (c).

1. The Participants encourage non-Participants that are developing a manufacturing capacity for civil aircraft to apply the disciplines of this Sector Understanding. In this context the Participants invite non-Participants to enter into a dialogue with them regarding the conditions of joining the ASU.

2. The Secretariat should ensure that a non-Participant interested in participating in this Sector Understanding is provided with full information on the terms and conditions associated with becoming a Participant to this Sector Understanding.

3. The non-Participant would then be invited by the Participants to take part in the activities in pursuance of this Sector Understanding and to attend, as an observer, the relevant meetings. Such an invitation would be for a maximum of two years and could be renewed once for a further two years. During this period the non-Participant shall be invited to provide a review of its export credit system, especially for the export of civil aircraft.

4. At the end of that period, the non-Participant shall indicate whether it wishes to become a Participant in this Sector Understanding and to follow its disciplines; in the case of such confirmation, the non-Participant shall contribute, on an annual basis, to the costs associated with the implementation of this Sector Understanding.

5. The interested non-Participant shall be considered a Participant 30 working days after the confirmation referred to in Article 4 of this Appendix.

1. The Participants have agreed on a list of risk classifications (the List) for buyers/borrowers; such risk classifications reflect the senior unsecured credit rating of buyers/borrowers using a common rating scale such as that of one of the credit rating agencies (CRA).

2. The risk classifications will be made by experts nominated by the Participants against the risk categories set out in Table 1 of this Appendix.

3. The List shall be binding at any stage of the transaction (e.g. campaign and delivery), subject to the provisions of Article 15 of this Appendix.

4. The List shall be developed and agreed among the Participants prior to the entry into force of this Sector Understanding; it shall be maintained by the Secretariat and made available to all the Participants on a confidential basis.

5. Upon request, the Secretariat may, on a confidential basis, inform an aircraft-producing non-Participant of the risk classification of a buyer/borrower; in this case, the Secretariat shall inform all Participants of the request. A non-Participant may, at any time, propose additions to the List to the Secretariat. A non-Participant proposing an addition to the List may participate in the risk-classification procedure as if it were an interested Participant.

6. Subject to the provisions of Article 15 of this Appendix, the List may be updated on an ad hoc basis in the event that either a Participant signals, in any form, its intention to apply another risk classification than that on the List, or a Participant needs a risk classification for a buyer/borrower that is not yet on the List ( 20 ) ( 21 ).

7. Any Participant shall, before any use of an alternative or new risk classification, send a request to the Secretariat for updating the List on the basis of an alternative or new risk classification. The Secretariat will circulate this request to all Participants within two working days, without mentioning the identity of the Participant who submitted the request.

8. A period of ten ( 22 ) working days is allowed for interested Participants either to agree to or to challenge any proposed change to the List; a failure to respond within this period is considered as an agreement to the proposal. If at the end of the ten-day period, no challenge has been made to the proposal, the proposed change in the List is deemed to have been agreed. The Secretariat will modify the List accordingly and send an OLIS message within five working days; the revised List shall be binding from the date of that message.

9. In the event of a challenge to a proposed risk classification, interested Participants shall, at an expert level, make their best efforts to come to an agreement on the risk classification within a further period of ten working days after notification of a disagreement. All means necessary to resolve the disagreement should be explored, with the assistance of the Secretariat if necessary (e.g. conference calls or face-to-face consultations). If interested Participants agree to a risk classification within this ten working-day period, they shall inform the Secretariat of the outcome upon which the Secretariat will update the List accordingly and send an OLIS message in the following five working days. The adjusted List shall be binding from the date of that message.

10. In case the disagreement is not resolved among the experts within ten working days, the issue will be referred to the Participants for decision on an appropriate risk classification, in a period that shall not exceed five working days.

11. In the absence of a final agreement, a Participant may have recourse to a CRA to determine the risk classification of the buyer/borrower. In such cases, the Chairman of the Participants shall address a communication on behalf of the Participants to the buyer/borrower, within ten working days. The communication shall include the terms of reference for the risk assessment consultation as agreed among the Participants. The resulting risk classification will be registered in the List and become binding immediately following the Secretariat's OLIS message to finalise the update procedure within five working days.

12. Unless otherwise agreed, the cost of such recourse to a CRA shall be borne by the interested buyer/borrower.

13. During the procedures set out in Articles 9 to 11 of this Appendix, the prevailing risk classification (when available on the List) shall remain applicable.

14. The valid risk classifications are the prevailing risk classifications as recorded in the List maintained by the Secretariat; indications and commitments of premium rates shall only be made in accordance with those risk classifications.

15. Risk classifications have a 12-month maximum validity period from the date recorded in the List by the Secretariat for the purpose of the Participants providing indication and final commitments of premium rates; the validity period for a specific transaction may be extended by an additional 18 months once a commitment or a final commitment has occurred and premium holding fees are charged. Risk classifications may be subject to revision during the 12-month validity period in case of material changes to the risk profile of the buyer/borrower, such as a modification of a rating delivered by a CRA.

16. Unless any Participant requests its update, at least 20 working days before the end of the relevant risk classification validity period, the Secretariat shall remove that risk classification from the next succeeding updated List. The Secretariat will circulate this update request to all Participants within two working days, without mentioning the identity of the Participant who submitted the request, and the procedures set out in Articles 9 to 11 of this Appendix shall apply.

17. If, at the campaign stage, a buyer/borrower requests an indication of its risk classification and if it is not yet on the List, that buyer/borrower may ask for an indicative risk classification from a CRA at its own expense. This risk classification shall not be included in the List; it may be used by the Participants as a basis for their own risk assessment.

18. Articles 19 to 58 of this Appendix set out the minimum premium rates corresponding to the risk classification of a buyer/borrower (or, if a different entity, the primary source of repayment of the transaction).

19. The Participants may provide official support at or above the minimum premium rate provided that all the conditions below are fulfilled:

20. For purposes of Article 19 of this Appendix:

21. Pursuant to Article 11 of this Sector Understanding, the minimum premium rates to be applied are composed of minimum risk-based rates (RBR) to which a market reflective surcharge (MRS) shall be added, in accordance with Articles 22 to 34 below.

22. As of the entry into force of this Sector Understanding, the RBRs are:

23. The RBRs rates shall be reset on an annual basis, based on 4-year moving average of the annual Moody's Loss Given Default (LGD). The appropriate LGD for this reset is based on the 1st Lien Senior Secured Bank Loans, and shall be calculated as follows:

24. A RBR adjustment factor shall be determined as follows:

25. The RBR adjustment factor shall be multiplied by the RBRs set out in Table 2 above, in order to determine the reset RBRs.

26. The first reset process will take place in the first quarter of 2012 and the resulting RBRs will become effective as of 15 April 2012.

27. The RBRs resulting from subsequent reset processes will be effective as of 15 April of each following year. Once the RBRs resulting from the annual reset have been determined, the Secretariat shall inform immediately all Participants of the applicable rates and make them publicly available.

28. For each risk category, a Market Reflective Surcharge shall be calculated as follows:

MRS = B × [(0,5 × MCS) – RBR]

where:

29. Where risk categories include more than one risk rating, the spreads shall be averaged. In risk category 1, the BBB- spread shall be used.

30. The MCS spreads shall be discounted by 50 % to account for the asset-security. The MCS discounted spreads shall then be adjusted by a blend factor ranging from 70 % to 35 % as per Table 4 below, applied on the difference between the MCS discounted spreads and the RBR. Any negative spreads resulting from the blending shall not be deducted.

31. The MRS shall be updated on a quarterly basis, as follows:

32. The MRS shall be applied only if and when it is positive and exceeds 25 basis points.

33. The increase in minimum premium rates resulting from the MRS update shall not exceed 10 % of the previous quarterly minimum premium rates. The minimum premium rates (which result from adding the risk-based rates and the market reflective surcharge) shall not exceed the risk-based rates by more than 100 %.

34-1. In order to determine the minimum premium rates:

The following formula shall be used:

Net MPR = MPR × (1 + RTAS) × (1 + RFAS) × (1 + RMRS) × (1 – CTCD) × (1 + NABS) – CICD

Where:

Premium may be paid either upfront or, over the life of the facility, as spreads expressed in basis points per annum, or in any combination of upfront rates and spreads. The upfront rates and spreads shall be calculated using the premium rate conversion model (PCM) so that the premium payable for a given transaction has the same NPV whether payable upfront, as a spread over the life of the facility, or a combination thereof. In transactions where, prior to the commencement of cover, terms are agreed or stipulated, which entail a reduction in the weighted average life, an upfront rate (calculated using the PCM) may be charged, which in terms of the resulting premium payable, corresponds to that payable in NPV terms under the spreads.

34-2. The applicable minimum premium rates as of the initial effective date of this Sector Understanding (1 February 2011) are set out in Table 5 below.

35. Subject to the provisions of Article 36 of this Appendix, a reduction of the minimum premium rates established in accordance with sub-Section I above shall be allowed if:

36. The reduction of the minimum premium rates established in accordance with sub-Section I above shall not exceed 10 % of the applicable minimum premium rate.

37. In order to be included on the Cape Town List, a State shall:

38. To qualify under Article 35 of this Appendix, a territorial unit shall:

39. An initial agreed Cape Town List shall be provided by the Participants to the Secretariat prior to the entry into force of this Sector Understanding. Updates to the Cape Town List shall be made in accordance with Articles 40 to 52 of this Appendix.

40. Any Participant or non-Participant which provides official support for aircraft may propose to the Secretariat the addition of a State to the Cape Town List. Such proposal shall include, with respect to such State:

41. The Secretariat shall circulate an OLIS message within five working days containing the proposal.

42. Any Participant or non-Participant which provides official support for aircraft may propose that a State be removed from the Cape Town List if they are of the view that such State has taken actions that are inconsistent with, or failed to take actions that are required by virtue of, that State's Cape Town Convention commitments. To that end, the Participant or non-Participant shall include in a proposal for removal from the Cape Town List, a full description of the circumstances that have given rise to the proposal for deletion, such as any State actions that are inconsistent with its Cape Town Convention commitments, or any failure to maintain or enforce legislation required by virtue of that State's Cape Town Convention commitments. The Participant or non-Participant who submits the proposal for removal from the Cape Town List shall provide any supporting documentation that may be available, and the Secretariat shall circulate an OLIS message within five working days containing such proposal.

43. Any Participant or non-Participant which provides official support for aircraft may propose the reinstatement of a State that has been previously removed from the Cape Town List, where such reinstatement is justified by subsequent corrective actions or events. Such a proposal shall be accompanied by a description of the circumstances that gave rise to the removal of the State as well as a report of the subsequent corrective actions in support of reinstatement. The Secretariat shall circulate an OLIS message within five working days containing such proposal.

44. The Participants may either agree to or challenge a proposal brought forward under Articles 40 to 43 of this Appendix within 20 working days from the date of submission of the proposal (‘Period 1’).

45. If at the end of Period 1, no challenge has been made to the proposal, the proposed update to the Cape Town List is deemed to have been accepted by all Participants. The Secretariat will modify the Cape Town List accordingly and send an OLIS message within five working days. The updated Cape Town List shall take effect on the date of that message.

46. In the event of a challenge to the proposed update of the Cape Town List, the challenging Participant or Participants shall, within Period 1, provide a written explanation of the basis of the challenge. Following circulation by the OECD Secretariat to all Participants of the written challenge, the Participants shall make best efforts to come to an agreement within a further ten working day period (‘Period 2’).

47. The Participants shall inform the Secretariat of the outcome of their discussions. If an agreement is reached during Period 2, the Secretariat will, if necessary, update the Cape Town List accordingly and send an OLIS message in the following five working days. The updated Cape Town List shall take effect on the date of that message.

48. If no agreement is reached during Period 2, the Chairman of the Participants to this Sector Understanding (hereafter ‘the Chairman’) will make her/his best efforts to facilitate a consensus between the Participants, within twenty working days (‘Period 3’) immediately following Period 2. If at the end of Period 3, no consensus is reached, a final resolution shall be achieved through the following procedures:

49. If, following a proposal submitted under Article 40, the Participants or Chairman has determined that a State is not eligible to be added to the Cape Town List, a Participant or non-Participant may submit another proposal requesting that the Participants reconsider the State's eligibility. The proposing Participant or non-Participant shall address the reasons substantiating the original determination of ineligibility. The proposing Participant or non-Participant shall also obtain and provide an updated CTC questionnaire. This new proposal shall be subject to the process set out in Articles 44 to 50.

50. In the event of any change to the list of qualified countries pursuant to the procedures set out in Article 48 of this Appendix, the Secretariat shall issue an OLIS message containing the updated Cape Town List within five working days of such change. The updated Cape Town List shall take effect on the date of that message.

51. The addition, withdrawal or reinstatement of a State to the Cape Town List after disbursement in respect of an aircraft shall not affect MPRs established regarding such aircraft.

52. In the context of the process set out in Articles 40 to 50 of this Appendix, the Participants shall not disclose any information relating to views or positions expressed.

53. The Participants shall monitor the implementation of Articles 40 to 52 of this Appendix and review it in the first half of 2012, annually thereafter or upon the request of any Participant.

54. The following adjustments to the applicable minimum premium rates may be applied:

55. Notwithstanding the provisions of Article 19(a) of this Appendix, the Participants may provide officially supported export credits for non-asset backed transactions, provided either of the following conditions is fulfilled:

56. The provisions of Articles 35 to 51 of this Appendix do not apply to officially supported export credits provided pursuant to Article 55 of this Appendix.

57. When providing official support for all goods and services other than used aircraft covered by Part 3 of this Sector Understanding, the minimum premium rates shall be as follows:

58. The provisions of Articles 35 to 54 of this Appendix shall apply to official support for all goods and services other than used aircraft covered by Part 3 of this Sector Understanding.

1. For the purpose of Section 2 of Appendix II, the term ‘qualifying declarations’, and all other references thereto in this Sector Understanding, means that a Contracting party to the Cape Town Convention (Contracting Party):

2. The declarations for the purpose of Article 1(a) of this Annex are:

And at least one of the following (though both are encouraged):

3. The declarations referred to in Article 1(b) of this Annex are the following:

4. Regarding Article XI of the Aircraft Protocol, for Member States of the European Union, the qualifying declaration set out in Article 2(a) of this Annex shall be deemed made by a Member State, for purposes hereof, if the national law of such Member State was amended to reflect the terms of Alternative A under Article XI of the Aircraft Protocol (with a maximum 60 calendar days waiting period). As regards the qualifying declarations set out in Articles 2(c) and (e) of this Annex, these shall be deemed satisfied, for the purpose of this Sector Understanding, if the laws of the European Union or the relevant Member States are substantially similar to that set out in such Articles of this Annex. In the case of Article 2(c) of this Annex, the laws of the European Union (EC Regulation 593/2008 on the Law Applicable to Contractual Obligations) are agreed to be substantially similar to Article VIII of the Aircraft Protocol.

1. The name and full address of the law firm completing the questionnaire.

2. The law firm's relevant experience, which could include experience in legislative and constitutional processes as they relate to the implementation of international treaties in the State, and specific experience in CTC related issues including any experience in advising either a government on implementation and enforcement of the Cape Town Convention or the private sector, or enforcement of creditor's rights in the State which is proposed to be added to the Cape Town List;

3. Whether the law firm is involved or intends to be involved in any transactions that may benefit from a reduction of minimum premium rates if the proposed State is added to the CTC list ( 24 );

4. The date on which this questionnaire was completed.

1.1 Has the State ( 25 ) made each of the qualifying declarations in accordance with the requirements of Annex 1 to Appendix II of the Sector Understanding on Export Credits for Civil Aircraft (‘ASU’) (each a ‘Qualifying Declaration’)? In particular, regarding the declarations concerning ‘Method for Exercising Remedies’ (Article 2(d)) and ‘Timely Remedies’ (Article 2(e)), please specify if one or both of these have been made.

1.2 Please describe the way in which the declarations made differ, if at all, from the requirements referred to in Question 1.1.

1.3 Please confirm that the State has not made any of the declarations listed in Article 3 of Annex 1 to Appendix II of the ASU.

1.1 Has the State ratified, accepted, approved or acceded to the Cape Town Convention and Aircraft Protocol (‘Convention’)? Please could you state the date of ratification/accession and briefly describe the State's process of accession to or ratification of the Convention?

1.2 Do the Convention and Qualifying Declarations (‘QD’) made have the force of law in the whole territory of the State without any further act, implementing legislation or the passing of any further law or regulation?

1.3 If so, please briefly explain the process that gives the Convention and QDs the force of law.

1.1 Describe and list, if applicable, the implementing legislation and regulation(s) with respect to the Convention and each QD made by the State.

1.2 Would the Convention and QDs made, as translated into national law ( 26 ) (‘Convention and QDs’), overrule or have priority over any conflicting national law, regulation, order, judicial precedent or regulatory practice. If so, please describe the process by which this happens ( 27 ), and if not, please provide details.

1.3 Are there any existing gaps in the implementation of the Convention and QDs? If so, please describe. ( 28 )

1.1 Please describe any matters, including judicial, regulatory, or administrative practice which could be expected to result in the courts, authorities or administrative bodies failing to give full force and effect to the Convention and QDs ( 29 ) ( 30 ).

1.2 To your knowledge, has there been any judicial or administrative enforcement action taken by a creditor under the Convention? If so, please describe the action and indicate whether it was successful.

1.3 To your knowledge, since ratification/implementation, have the courts in that State refused in any instance to enforce loan obligations of a debtor or guarantor in the State contrary to the Convention and QDs?

1.4 To your knowledge, are there any other matters that may impact whether courts and administrative bodies should be expected to act in a manner consistent with the Convention and QDs? If so, please specify.

(a) The minimum floating interest rate shall be, as appropriate, the EURIBOR, the Bank Bill Swap Rate, i.e. BBSY, the London Inter-Bank Offered Rate, i.e. LIBOR, as compiled by the British Bankers' Association (BB(A) with the currency and the maturity corresponding to the frequency of interest payment of officially supported export credit, or the Canadian Dealer Offered Rate (CDOR), to which a margin benchmark calculated in accordance with Article 8 of this Appendix, shall be added.

(b) The floating interest rate setup mechanism shall vary according to the repayment profile chosen, as follows:

(c) Where official financing support is provided for floating rate loans, buyers/borrowers may have the option to switch from a floating rate to a fixed rate provided that the following conditions are fulfilled:

(a) The swap rate, concerning the relevant currency of the officially supported export credit and with a maturity equal to the interpolated rate for the two closest available annual periods to the weighted average life of the loan. The interest rate shall be set two business days prior to each drawdown date.

OR

(b) The Commercial Interest Reference Rate (CIRR) established according to the provisions set out in Articles 3 to 7 of this Appendix,

to which, in both cases, the margin benchmark, calculated in accordance with Article 8(f) of this Appendix, shall be added.

(a) A CIRR is established for any of the eligible currencies set out in Article 9 of this Sector Understanding and calculated by adding a fixed margin of 120 basis points to one of the following three yields (the base rates):

(b) CIRR shall be calculated monthly using data from the previous month and notified to the Secretariat, no later than five days after the end of each month. The Secretariat shall then inform immediately all Participants of the applicable rates and make them publicly available. CIRR shall take effect on the 15th day of each month.

(c) A Participant or a non-Participant may request that a CIRR be established for the currency of a non-Participant. In consultation with the non-Participant, a Participant or the Secretariat on behalf of that non-Participant may make a proposal for the construction of the CIRR in that currency using the Common Line procedures set out in Articles 28 to 33 of this Sector Understanding.

(a) Holding the CIRR: the CIRR applying to a transaction shall not be held for a period longer than six months from its selection (export contract date or any application date thereafter) to the credit agreement date. If the credit agreement is not signed within that limit, and the CIRR is reset for an additional six months, the new CIRR shall be committed at the rate prevailing at the date of reset.

(b) After the credit agreement date, the CIRR shall be applied for drawing periods which do not exceed six months. After the first six-month drawing period, the CIRR is reset for the next six months; the new CIRR shall be the one prevailing at the first day of the new six-month period and cannot be lower than the CIRR originally selected (procedure to be replicated for each subsequent six-month period of drawings).

(a) A three-month LIBOR margin benchmark shall be calculated monthly in accordance with paragraph (b), using data notified to the Secretariat in accordance with paragraph (c), and shall take effect on the 15th day of each month. Once calculated, the margin benchmark shall be notified by the Secretariat to the Participants and shall be made publicly available.

(b) The three-month LIBOR margin benchmark shall be a rate equivalent to the average of the lowest 50 % of the margins over: (i) three-month LIBOR charged for floating rate transactions and (ii) three-month LIBOR as interpolated by swapping the fixed rate issuance to a floating rate equivalent charged for fixed rate transactions or capital market issuances. In either case, the margins included in the monthly benchmark reports submitted by relevant Participants shall be those from the three full calendar months preceding the effective date set out in paragraph (a) above. Transactions / issuances that are used in the calculation of the margin benchmark shall meet the following conditions:

(c) Participants shall report a margin at the time it becomes known and that margin will remain on the Participant's margin benchmark report for three full calendar months. In the case of individual transactions with multiple pricing events, there shall be no attempt to match subsequent pricing events to ex post notifications.

(d) Participants shall notify transactions as of the date on which the long-term margin is realised. For bank mandated deals (including PEFCO), the date on which the margin is realised would be the earliest of the following: (i) issuance of a final commitment by the Participant, (ii) setting of the margin post-commitment, (iii) loan drawdown, and (iv) setting of the long-term margin post-drawdown. In the case of several drawdowns occurring under the same bank mandate at the same margin, notification shall only be made in respect of the first aircraft. For loans funded by way of capital market issuance, the date on which the margin is realised shall be the date on which the long-term rate is set which is typically the bond issuance date. In the case of several drawdowns occurring under the same bond and at the same margin, notification shall only be made in respect of the first aircraft.

(e) The three-month LIBOR margin benchmark shall be applicable to a floating rate transaction and shall be set at final commitment.

(f) For a fixed rate transaction, the margin benchmark applicable to the transaction shall be determined by swapping the three-month LIBOR margin benchmark into an equivalent spread over the applicable fixed rate, as determined in Article 2 of this Appendix, on the final commitment date and shall be set as of that date.

(g) The Participants shall monitor the margin benchmark and shall review the margin benchmark mechanism upon the request of any Participant.

1. Notifying country

2. Notification date

3. Name of notifying authority/agency

4. Identification number

5. Name and country of buyer

6. Name and country of borrower

7. Name and country of guarantor

8. Status of buyer/borrower/guarantor, e.g. sovereign, private bank, other private

9. Risk classification of buyer/borrower/guarantor

10. In what form is official support provided, e.g. pure cover, official financing support

11. If official financing support is provided, is it a direct credit/refinancing/interest rate support

12. Description of the transaction supported, including the manufacturer, aircraft model and number of aircraft; indication of whether the transaction falls under the transitional arrangements set out in Article 39(a) or (b) of this Understanding.

13. Final commitment date

14. Currency of credit

15. Credit amount, according to the following scale in USD millions:

16. Percentage of official support

17. Repayment term

18. Repayment profile and frequency — including, where appropriate, weighted average life

19. Length of time between the starting point of credit and the first repayment of principal

20. Interest rates:

21. Total premium charged by way of:

22. In the case of direct credit/financing, fees charged by way of:

23. Premium holding period

24. In the case of pure cover, premium holding fees

25. Transaction structuring terms: risk mitigants/premium surcharge applied

26. As appropriate, an indication of the impact of the Cape Town Convention on the premium rate applied

(a) This Sector Understanding sets out the financial terms and conditions that apply to officially supported export credits relating to contracts in the eligible sectors listed in Appendix I of this Sector Understanding for:

(b) This Sector Understanding does not apply to items located outside the power plant site boundary for which the buyer is usually responsible, in particular, water supply not directly linked to the power production plant, costs associated with land development, roads, construction villages, power lines and switchyard, as well as costs arising in the buyer's country from official approval procedures (e.g. site permits, construction permit), except:

(a) This Sector Understanding sets out the financial terms and conditions that apply to officially supported export credits relating to contracts in a sector listed in Appendix II of this Sector Understanding. This list of sectors and, when applicable, corresponding technology-neutral performance criteria used to define a project's eligibility, may be modified over time in accordance with the review provisions set out in Article 12 of this Sector Understanding.

(b) Such contracts shall relate to the export of complete projects or parts thereof, comprising all components, equipment, materials and services (including the training of personnel) directly required for the construction and commissioning of an identifiable project, providing that:

(a) This Sector Understanding sets out the financial terms and conditions that apply to officially supported export credits relating to contracts for projects which meet the criteria set out in Appendix III of this Sector Understanding.

(b) Such contracts shall relate to the export of complete projects or parts thereof, comprising all components, equipment, materials and services (including the training of personnel) directly required for the execution and commissioning of an identifiable project, providing that:

(c) This Sector Understanding applies to the modernisation of existing projects, to take into consideration adaptation concerns, in cases where the economic life of the project is likely to be extended by at least the repayment period to be awarded. If this criterion is not met, the terms of the Arrangement apply.

(a) Infrastructure for the supply of drinking water to municipalities, including to households and small businesses, i.e. water purification for the purpose of obtaining drinking water and distribution network (including leakage control).

(b) Wastewater collection and treatment facilities, i.e. collection and treatment of household and industrial wastewater and sewage, including processes for the re-use or recycling of water and the treatment of sludge directly associated with these activities.

(c) The modernisation of such facilities in cases where the economic life of the plant is likely to be extended by at least the repayment period to be awarded. If this criterion is not met, the provisions of the Arrangement apply.

(a) For officially supported export credits relating to contracts in the sectors listed in Appendix I, and for water projects defined in Article 4 of this Sector Understanding, the maximum repayment term is 18 years.

(b) For officially supported export credits relating to contracts of a value of at least SDR 10 million in the project classes listed in Appendix II, the maximum repayment term is set out as follows:

(c) For officially supported export credits relating to contracts of a value of less than SDR 10 million in the project classes listed in Appendix II, the maximum repayment term is set out as follows:

(d) For officially supported export credits relating to contracts of a value of at least SDR 10 million for projects supported in conformity with Appendix III, the maximum repayment term is 15 years.

(a) The Participants shall apply a profile of repayment of principal and payment of interest as specified in sub-paragraphs (1) or (2) below:

(b) Principal shall be repaid and interest shall be paid no less frequently than every six months and the first instalment of principal and interest shall be made no later than six months after the starting point of credit.

(c) On an exceptional and duly justified basis, official support may be provided on terms other than those set out in paragraphs (a) and (b) above. The provision of such support shall be explained by an imbalance in the timing of the funds available to the obligor and the debt service profile available under an equal, semi-annual repayment schedule, and shall comply with the following criteria:

(d) Interest due after the starting point of credit shall not be capitalised.

(a) For officially supported export credits relating to contracts of a value of at least SDR 10 million, official support provided for local costs shall not exceed 30 % of the export contract value.

(b) For officially supported export credits relating to contracts of a value of less than SDR 10 million:

(c) Where official support for local cost exceeds 15 % of the export contract value, such official support shall be subject to prior notification, pursuant to Article 10 of this Sector Understanding, specifying the nature of the local costs being supported.

(a) A Participant intending to provide support in accordance with the provisions of this Sector Understanding, shall give prior notification at least ten calendar days before issuing any commitment, in accordance with:

(b) For projects falling in the Project Classes listed in Appendix II of this Sector Understanding, such notifications shall include an enhanced description of the project in order to demonstrate how the project complies with the criteria for support, as set out in Article 2(b) of this Sector Understanding.

(c) For projects supported in conformity with Appendix III of this Sector Understanding, such notification shall include:

(d) Notwithstanding paragraph (a)(1) above, if the notifying Participant intends to provide support with a repayment term in excess of 15 years and/or in accordance with Article 6(c) of this Sector Understanding, it shall give prior notification at least ten calendar days before issuing any commitment in accordance with Article 47 of the Arrangement.

(e) A Participant shall inform all other Participants of its final decision following a discussion, to facilitate the review of the body of experience.

(a) Term-adjusted risk-premia.

(b) Conditions for low emission/high energy efficiency fossil fuel power plants including definition of CCS-readiness.

(c) Net zero energy buildings.

(d) Smart grids.

(e) Fuel cell projects.

(a) The Secretariat shall report annually on the implementation of this Sector Understanding.

(b) The Participants shall regularly review the scope and other provisions of this Sector Understanding and at the latest by the end of 2017.

(c) Appendix II of this Sector Understanding shall be reviewed at regular intervals, including upon the request of a Participant, with the view to assessing whether any Project Class and/or Type should be added to, or removed from, or whether any thresholds should be changed in, that Appendix. Proposals for new Project Classes and/or Types shall be supported by information on how projects within such a Class/Type should fulfil the criteria set out in Article 2(b) and shall follow the methodology set out in Appendix IV of this Sector Understanding.

(d) The Participants shall undertake a review of Appendix III of this Sector Understanding no later than by 30 June 2018, with a view to assessing the international initiatives related to adaptation, market conditions, and the body of experience developed from the notification process to determine if the definitions, project criteria, terms and conditions should be continued and or amended.

(e) After 31 December 2018, the terms and conditions related to Appendix III shall be discontinued unless the Participants agree otherwise.

(a) Wind energy ( 32 ).

(b) Geothermal energy.

(c) Tidal and tidal stream power.

(d) Wave power.

(e) Osmotic power.

(f) Solar photovoltaic power.

(g) Solar thermal energy.

(h) Ocean thermal energy.

(i) Bio-energy: all sustainable landfill gas, sewage treatment plant gas, biogas energy or fuel derived from biomass energy installations. ‘Biomass’ shall mean the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste.

(j) Hydro power.

(k) Energy efficiency in Renewable Energies projects.

(a) Climate change adaptation is the principal objective of the project, and it is explicitly indicated and explained as such in the project plan and supporting documents, as being fundamental to the design of the project.

(b) The project's proposal shall include an analysis and identification of specific and relevant climate change-related risks and vulnerabilities, and how the proposed measures or technologies will directly address them.

(c) There is an independent third-party review conducted on the project, either separately or as an integral part of the project plan which is made publicly available, such as published on the website of the national authority. The review shall evaluate the specific and relevant climate change-related risks and vulnerabilities and how the proposed measures contained within the project will directly address them.

(d) The useful life of the project exceeds 15 years.

(a) An evaluation of the direct contribution of the Project Class or Type to climate change mitigation, including a comparison of the sector performance, based on measurable data regarding carbon emissions or CO2 equivalent and/or in high energy efficiency, with conventional and in-use newer technological approaches; this comparison shall, in all cases, be based on quantitative measures, such as a decrease in emissions per unit produced.

(b) A description of the technical and performance standards of the Project Class or Type proposed sector, including information on any relevant, existing Best Available Techniques (BAT); if appropriate, this description shall explain how the technology is an improvement on the existing BAT.

(c) A description of the financial barriers in the proposed Project Class or Type, including any financial needs and market conditions, and identify the provisions under this Sector Understanding that are expected to enable such projects to proceed.

(a) ‘techniques’ shall include both the technology used and the way in which the installation is designed, built, maintained, operated and decommissioned.

(b) ‘available’ techniques shall mean those developed on a scale which allows implementation in the relevant industrial sector, under economically and technically viable conditions, taking into consideration the costs and advantages, whether or not the techniques are used or produced inside the Member State in question, as long as they are reasonably accessible to the operator.

(c) ‘best’ shall mean most effective in achieving a high general level of protection of the environment as a whole.

(a) For officially supported export credits relating to contracts included within the scope of application of this Sector Understanding, the maximum repayment term is set out as follows:

(b) To qualify for the repayment terms set out in paragraph (a) above, the following conditions shall apply:

(c) A Participant may request a waiver of the condition set out in paragraph (b)(3) above, through use of a Common Line, in accordance with Articles 58 to 63 of the Arrangement. In such cases, the Participant proposing the Common Line shall provide, either in the proposed Common Line or in each individual transaction thereafter notified, a comprehensive explanation for the support, including specific data on pricing, and a rationale for the need to waive the provisions of paragraph (b)(3) above.

(a) For transaction in a Category I countries, six-and-a-quarter years; and

(b) For transaction in a Category II countries, seven-and-a-quarter years.

(a) For repayment terms of up to and including 12 years, the relevant Commercial Interest Reference Rates (CIRRs) constructed in accordance with Article 20 of the Arrangement.

(b) For repayment terms in excess of 12 years, the relevant Commercial Interest Reference Rates (CIRRs) constructed in accordance with Article 20 of the Arrangement, to which a surcharge of 20 basis points shall be added for all currencies.

(a) A Participant shall give prior notification in accordance with Article 47 of the Arrangement at least ten calendar days before issuing any commitment if it intends to provide support for a transaction in a Category I country. Such notifications shall include a comprehensive explanation for the official support, including specific data on pricing.

(b) A Participant shall give prior notification in accordance with Article 48 of the Arrangement at least ten calendar days before issuing any commitment if it intends to provide support for:

(a) The Secretariat shall report annually on the implementation of this Sector Understanding.

(b) After 31 December 2017, and subject to paragraph (c) below, the less than 50 % syndication requirement set out in sub-paragraph ii) of the first tiret of Article 2(b)(3) of this Sector Understanding shall be replaced by a maximum 35 % syndication requirement unless the Participants agree otherwise.

(c) The Participants shall undertake a review of this Sector Understanding by no later than 30 June 2017 with a view to assessing the market conditions and other factors to determine whether the terms and conditions should be continued and or amended.

(d) After 31 December 2017, the terms and conditions of this Sector Understanding shall be discontinued unless the Participants agree otherwise.

(a) This Annex sets out terms and conditions that Participants may support for project finance transactions that meet the eligibility criteria set out in Appendix 1.

(b) Where no corresponding provision exists in this Annex, the terms of the Arrangement shall apply.

(a) No single repayment of principal or series of principal payments within a six-month period shall exceed 25 % of the principal sum of the credit.

(b) The first repayment of principal shall be made no later than 24 months after the starting point of credit and no less than 2 % of the principal sum of the credit shall have been repaid 24 months after the starting point of credit.

(c) Interest shall be paid no less frequently than every 12 months and the first interest payment shall be made no later than six months after the starting point of credit.

(d) The weighted average life of the repayment period shall not exceed seven-and-a-quarter years.

(e) The Participant shall give prior notification according to Article 5 of this Annex.

(a) For repayment terms of up to and including 12 years, Participants shall apply the relevant Commercial Interest Reference Rates (CIRRs) constructed in Accordance with Article 20 of the Arrangement.

(b) For repayment terms in excess of 12 years, a surcharge of 20 basis points on the CIRR shall apply for all currencies.

(a) The financing of a particular economic unit in which a lender is satisfied to consider the cash flows and earnings of that economic unit as the source of funds from which a loan will be repaid and to the assets of the economic unit as collateral for the loan.

(b) Financing of export transactions with an independent (legally and economically) project company, e.g. special purpose company, in respect of investment projects generating their own revenues.

(c) Appropriate risk-sharing among the partners of the project, e.g. private or creditworthy public shareholders, exporters, creditors, off-takers, including adequate equity.

(d) Project cash flow sufficient during the entire repayment period to cover operating costs and debt service for outside funds.

(e) Priority deduction from project revenues of operating costs and debt service.

(f) A non-sovereign buyer/borrower with no sovereign repayment guarantee (not including performance guarantees, e.g. off-take arrangements).

(g) Asset-based securities for proceeds/assets of the project, e.g. assignments, pledges, proceed accounts;

(h) Limited or no recourse to the sponsors of the private sector shareholders/sponsors of the project after completion.

(a) Participation in a loan syndication with private financial institutions that do not benefit from Official Export Credit Support, whereby:

(b) Premium rates for any official support that do not undercut available private market financing and that are commensurate with the corresponding rates being charged by other private financial institutions that are participating in the syndication.

1. Notifying country

2. Notification date

3. Name of notifying authority/agency

4. Reference number

5. Original notification or revision to previous notification (revision number as relevant)

6. Tranche number (if relevant)

7. Reference number of credit line (if relevant)

8. Arrangement Article(s) under which the notification is being made

9. Reference number of notification being matched (if relevant)

10. Description of support being matched (if relevant)

11. Destination Country

12. Buyer Country

13. Buyer Name

14. Buyer Location

15. Buyer Status

16. Borrower Country (if different from the buyer)

17. Borrower Name (if different from the buyer)

18. Borrower Location (if different from the buyer)

19. Borrower Status (if different from the buyer)

20. Guarantor Country (if relevant)

21. Guarantor Name (if relevant)

22. Guarantor Location (if relevant)

23. Guarantor Status (if relevant)

24. Description of the goods and/or services being exported

25. Description of the project (if relevant)

26. Location of the project (if relevant)

27. Tender closing date (if relevant)

28. Expiry date of credit line (if relevant)

29. Value of contract(s) supported, either the actual value (for all lines of credit and project finance transactions or for any individual transaction on a voluntary basis) or according to the following scale in millions of SDRs:

30. Currency of contract(s)

31. Credit value; the actual value for notifications involving lines of credit and project finance transactions or for any individual transaction on a voluntary basis, or according to the SDR scale

32. Currency of credit

33. Down payment (percentage of the total value of the contracts supported)

34. Local Costs (percentage of the total value of the contracts supported)

35. Starting point of credit and reference to the applicable sub-paragraph of Article 10

36. Length of the repayment period

37. Interest rate base

38. Interest rate or margin

1. Repayment profile

2. Repayment frequency

3. Length of time between the starting point of credit and the first repayment of principal

4. Amount of interest capitalised before the starting point of credit

5. Weighted average life of the repayment period

6. Explanation of the reason for not providing support according to Article 14 paragraphs (a) through (c)

1. Country risk classification of the obligor's country

2. Selected buyer risk category of the obligor

3. Length of the disbursement period

4. Percentage of cover for political (country) risk

5. Percentage of cover for commercial (buyer) risk

6. Quality of cover (i.e. below standard, standard, above standard)

7. MPR based on the country risk classification of the obligor's country absent any third party guarantee, involvement of a multilateral/regional institution,risk mitigation and/or buyer risk enhancements

8. Applicable MPR

9. Actual premium rate charged (expressed in MPR format as a percentage of the principal)

1. Benchmark(s) applied (see Annex IX).

1. Country risk classification of the guarantor's country

2. Selected buyer risk classification of the guarantor

3. Confirmation that all of the criteria listed in Annex X have been met.

4. Percentage of the total amount at risk (i.e. principal and interest) that is covered by the guarantee (i.e. total or partial amount)

5. Indication as to whether any financial relationship exists between the guarantor and the obligor

6. In the case that there is a relationship between the guarantor and the obligor:

1. Selected buyer risk category of the obligor

2. Accredited CRA foreign currency rating(s)

3. Rationale for buyer risk category better than accredited CRA rating

1. Country risk mitigation technique used

2. Confirmation that the criteria listed in Annex XII have been met

3. For Technique 1, the applicable country risk classification resulting from the use of the technique.

4. For Technique 2:

1. The BRCE(s) applied

2. The CEF applied for each credit enhancement

3. The total CEF to be applied

1. Form of tied aid (i.e. development aid or premixed credit or associated finance)

2. Overall concessionality level of the tied and partially untied aid financing calculated in accordance with Article 40

3. DDR used for concessionality calculation

4. Treatment of cash payments in the calculation of the concessionality level

5. Restrictions on use of credit lines

1. Indication of:

1. Enhanced description of the export contract, i.e. new nuclear power station, modernisation of an existing nuclear power plant, supply of nuclear fuel and enrichment, or provision of spent fuel management.

2. Repayment of principal and payment of interest according to: Article 3(a)(1), Article 3(a)(2) or Article 3(c) of Annex II.

3. Where official support is provided in accordance with Article 3(c) of Annex II, please provide:

4. Minimum interest rate applied in accordance with Article 4 of Annex II.

1. Enhanced description of the project:

2. Repayment profile of principal and payment of interest according to: Article 6(a)(1), Article 6(a)(2) or Article 6(c) of Annex IV.

3. Where official support is provided in accordance with Article 6(c) of Annex IV, please provide:

4. Minimum interest rate applied in accordance with Article 7 of Annex IV.

1. Comprehensive explanation for the terms and conditions of the official support provided, including:

2. For transactions in Category I countries:

1. Explanation of why project finance terms are being provided

2. Contract value in relation to turnkey contract, portion of sub-contracts, etc.

3. Enhanced project description

4. Type of cover provided prior to the starting point of credit

5. Percentage of cover for political risk prior to the starting point of credit

6. Percentage of cover for commercial risk prior to the starting point of credit

7. Type of cover provided after the starting point of credit

8. Percentage of cover for political risk after the starting point of credit

9. Percentage of cover for commercial risk after the starting point of credit

10. Length of the construction period (if applicable)

11. Length of the disbursement period

12. Weighted average life of the repayment period

13. Repayment profile

14. Repayment frequency

15. Length of time between the starting point of credit and the first repayment of principal

16. Percentage of principal repaid by the mid-point of credit

17. Amount of interest capitalised before the starting point of credit

18. Other fees received by the ECA, e.g. commitment fees (optional, except in the case of transactions with buyers in High Income OECD Countries)

19. Premium rate (optional, except in the case of projects in High Income OECD Countries)

20. Confirmation (and explanation as necessary) that the transaction involves/is characterised by:

1. Total debt syndication amount for the project, including official and private lenders

2. Total amount of the debt syndication from private lenders

3. Percentage of the debt syndication provided by the Participants

4. Confirmation that: